Finance ministers fail to reach deal on tax avoidance

Algirdas Šemeta, the European commissioner for taxation and anti-fraud, has said that he is disappointed that European Union finance ministers failed to agree tougher rules on tax evasion today.

Maria Fekter, the finance minister of Austria, the last country to oppose a revision of the EU’s savings tax directive, said during today’s meeting of finance ministers that while she “accepted” the text of the draft legislation, it was too early to approve it.

Luxembourg, which ended an eight-year resistance to the proposals in April, also did not approve the revision of the rules during today’s meeting.

The failure sets up the possibility of a row at the summit of member state leaders next week (15 May) where most countries will put pressure on Austria and Luxembourg to give in.

Šemeta said that today’s talks had been a “big opportunity” to take “decisive action” on tax evasion and that expectations had been high that a breakthrough would be made today.

“I cannot honestly say expectations were met,” he said.

Finance ministers did however agree to give the Commission a mandate to negotiate stricter bank transparency agreements with Switzerland, Liechtenstein, Andorra, Monaco and San Marino.

Šemeta said the Commission wanted to negotiate “ambitious agreements” with the countries. The aim is to ensure that these countries apply transparency measures equivalent to the EU’s savings tax directive. Negotiations will be based on the proposed revised legislation.

“It’s undoubtedly a step forward,” Šemeta said. “Let’s hope what leaders agree next week at the summit is more like a giant leap.”